Title: National Power Corporation v Provincial Government of Bataan

GR No. 180654
Date: April 21, 2014
Ponente: Abad, J.
Parties:
petitioner: National Power Corporation
respondents: Provincial Government of Bataan, Sangguniang Panlalawigan of Bataan, Pastor B. Vichuaco (In His Official Capacity
as Provincial Treasurer of Bataan) and The Register of Deeds of the Province of Bataan
Facts:
On March 28, 2003, the National Power Corporation (NPC) was given a notice of franchise tax delinquency worth P45.9 million by
the respondent Provincial Government for the period covering the years 2001-2003. The NPC did not contest as it awaited the SC
ruling in NPC v City of Cabanatutan which dealt on its exemption to pay the local franchise tax. NPC lost in this case. Thus, the
Province again sent the tax notices. This time, NPC alleged that it cannot be liable for the taxes because of the enactment of R.A.
9136 or the Electric Power Industry Reform Act (EPIRA) that took effect on June 26, 2001. Under this, the NPC was relieved of the
function of generating and supplying energy beginning 2001 as its energy transmission function and facilities were transferred to the
National Transmission Corporation (TRANSCO).
Despite this, the respondent levied 14 of the former properties of the petitioner in Limay, Bataan. The Province then won the same
properties at the public auction it held and sent the Certificate of Sale to the NPC stating that the amount garnered already covered
its franchise tax delinquency. Thus, the NPC filed with the RTC of Mariveles, Bataan a petition for declaration of nullity of the
foreclosure sale with prayer for preliminary mandatory injunction against the above-mentioned respondents. Its main allegation
being that the EPIRA provided that power generation is not a public utility operation requiring a franchise hence, its not taxable.
Also, it cannot be held liable for the taxes since TRANSCO now holds the facilities and franchise.
The RTC dismissed NPCs petition as it held that the franchise tax was not based on ownership of property but on the NPCs
exercise of the privilege of doing business within Bataan and that petitioner failed to prove that it had ceased to operate power
plants in that jurisdiction. The CA dismissed the case saying that it is the CTA who has jurisdiction.
Issues/ Held:
1. WON NPC no longer owned or operated the business subject to local franchise tax? YES.
2. WON the Province can execute on former NPC properties that had been taken from it and transferred to other government
corporations? NO.
Ratio:
There is no need for the presentation of evidence as the NPC wins the case by operation of law.
NPC no longer owned or operated the business. Section 8 of the EPIRA clearly provides that TRANSCO shall assume the
nationwide franchise of the NPC for the operation of the transmission system and the grid which includes all the NPC facilities and
assets required to carry out this function. All these took effect on June 26, 2001. Therefore, the respondent Province, cannot levy the
transmission facilities to satisfy the tax assessment as these are no longer owned by the NPC.
In relation to this, Section 49 of the EPIRA transferred all existing assets and liabilities of the NPC to the GOCC, Power Sector
Assets and Liabilities Management Corporation (PSALM Corp) within 180 days from the approval of the act. Included in these
liabilities is the local franchise tax from January 1 to June 25, 2001. Thus, the subject obligations is collectible solely from PSALM
Corp.
With all these, it can be said that NPC is not an indispensable party to the case unlike TRANSCO and PSALM Corp. The last two
must be included for the case to go forward. The proceedings from the lower courts that held NPC liable are therefore a nullity.
Based on the foregoing, the Court GRANTS the petition of the National Power Corporation and SETS ASIDE the resolution of the
CA and REMANDS the case to the RTC so that PSALM Corp and TRANSCO may be impleaded as proper parties.